Mandalay Bay Slapped with $500K Fine After Undercover Vice Bust

An undercover vice bust atop Mandalay Bay’s swank House of Blues Foundation Room on the Las Vegas Strip has left the casino hotel with a half-million dollar fine.

When it comes to misbehaving, what happens in Vegas stays in Vegas, they say, unless it “happens” to an undercover cop; then it’s splashed all over the news. And now MGM Resorts International-owned Mandalay Bay on the Las Vegas Strip has agreed to pay a $500k fine, after several employees were busted for procuring narcotics and prostitutes for uncover cops at the casino-hotel’s swanky Foundation Room ultra-lounge, a high-end club and restaurant atop the resort above the House of Blues.

Coke, Not Pepsi

Reports indicate that on June 8, 2012, an undercover officer visited the club, which is known for its VIP-style hospitality and stunning views of the Las Vegas Strip, and was able to purchase 2.8 grams of cocaine from a Foundation Room host. According to the complaint drafted by Nevada Deputy Attorney General Edward Magaw and filed by the state’s Gaming Control Board against the casino hotel, when the officer asked whether it would be permitted to take the drug inside the club, he was told that it was alright to do so, as long as he “was careful.” This incident prompted a joint undercover investigation by the Gaming Control Board and law enforcement agents.

On July 6, 2012, the same host sold more cocaine to a group of undercover agents, as well as 1.8 grams of ecstasy pills, while a different host promised he could obtain drugs for agents on their next visit to the Foundation Room. Then, on a third visit that same month, a different host sold an officer more cocaine, while also arranging for him to meet four women who agreed to have sex for money.

The complaint went on to say that officers also received assurances from a security official that they could be supplied marijuana and the prescription painkiller Lortab, as well as have a private room for sex. The complaint said that the ever-resourceful agents remained in the room for ten minutes to give the impression they had engaged in sexual activity.

(We pause here for you to chuckle).

Mandalay Held Accountable

On a fourth visit, in August, officers arranged to buy cocaine and a pure form of ecstasy called “Mollies.” In all, 10 employees – as well as an additional minimum of five non-employees – were named in the complaint.

Mandalay Corp made no protest at the findings and agreed to pay the fine, plus $17,000 in reimbursement of the expenses of the investigation. Although Mandalay leases the space on its 43rd floor to House of Blues, which operates the Foundation Room, the law holds casino property landlords responsible for activities that take place on their premises.

“While these activities took place outside our knowledge, we acknowledge our responsibility, as landlords, to monitor all nightclub and ultralounge operators at our resorts,” said MGM in a statement. “The intolerable activities discovered by investigators are obviously completely contrary to the type of luxury resort our company strives to run… [We] will increase our oversight and tenant monitoring to address the short term, while taking appropriate steps to further enhance training to assure compliance in the long term.”

House of Blues, meanwhile, has said that four of its employees were immediately fired in relation to the incident, while a contract with an unnamed “third-party vendor” was also terminated.

“When we became aware of this situation, we worked closely with Mandalay Bay to determine the extent of any of the alleged activities,” spokesman Jim Yeager said. “Over the ensuing months, we modified our procedures and our management oversight to ensure we remain compliant with all governing rights and restrictions.”